Watching television shows such as PBS’s “Start-up” or ABC’s “Shark Tank”, you likely heard the term “Business Plan”. And, if you do an Internet search on this topic, you’ll be bombarded with free templates, help for a fee and blogs by experts. Perhaps you’ll also find references to the mentoring help provided by SCORE.
In our May 28, 2017 article in Southeastern Connecticut Business Monthly, several basic questions about converting your business from a hobby to an enterprise were posed. Taking those questions into the context of creating a business plan, you should ask yourself,
Is there an unmet need my product or service answers?
Is my product or service equal or better than competitive solutions?
Am I able to change buying habits with an equal or better solution?
Is there sufficient number of potential customers to sustain my business?
If you’ve answered yes to these questions or at least have an idea of how to deal with the negative ones, then creating a business plan is a critical next step, even if you are anticipating financing the start up with your own funds.
In SCORE mentoring sessions with clients who want to start a business, we encourage them to create a virtual business. If the entrepreneur can go through the data gathering and thinking process of putting thoughts and numbers in writing (or in computer documents) and getting a non-partial review from competent sources, such as SCORE mentors, your likelihood of success is higher.
A typical business plan has two main components, a narrative and financials. The narrative is usually the easy part as you verbally describe (or pitch) your idea. You’ve usually thought about your business idea in words and images in your mind. Getting your business model, marketing data, competitive analysis, operational methods, etc. down in writing is not easy but necessary. Not only for your own benefit but if you need to seek financing outside of your own resources, a business plan is mandatory.
A business is managed primarily by numbers. When thinking about your business, you probably don’t envision spreadsheets on projected cash flow and breakeven point. Yet, any well-conceived business plan, whether a few pages or many is based on the financials. To get a grant, attract investors or get a loan, even one backed in part by the SBA, will require a well-prepared business plan. At a minimum, financials include,
Source and Uses of Funds Statement for start-ups or business expansions
Cash Flow Projection with break even point
Pro Forma Profit or Loss Statement
Pro forma balance sheet
The other components of the business plan are,
Executive Summary, written last and addresses why the business is a good investment,
Appendix, with your resume and other data collected which can be reference in the narrative.
A business plan is a living document. Once your business is operating, it becomes one of your management tools: How is my business doing compared to what I originally thought? What changes should I make? What is different in the business environment that I need to adjust to?
Our mission at SCORE is to help small businesses succeed. If you need assistance preparing or critiquing your business plan, we can help.
Bill Ward is a SCORE mentor. SCORE is a nonprofit association that offers free and confidential advice on starting your own business or improving and growing your existing small business. All 45 counselors in Southeast Connecticut are volunteers, receive no compensation, and are working or retired business owners, executives, and managers. SCORE’s nine counseling sites in Southeast Connecticut include Guilford, Madison, Old Saybrook, Essex, Waterford, Middletown, Mystic, Norwich, and New London. For more information on upcoming free workshops and how to schedule a free small business mentoring session with our counselors, visit www.sect.score.org.